Butterfly Network Inc (BFLY)

[sludgehound]

Little booster piece Holiday Spending

EmergingGrowth.com Report on Holiday Spending and Bluefly (NASDAQ: BFLY) as indicated by comScore (NASDAQ: SCOR).

http://www.investorideas.com/news/2012/main/12062.asp

New strategy is a recipe for success

Bluefly's (NASDAQ: BFLY) new strategy is a sure recipe for success. The new strategy trades off high gross margins for increased inventory turns. In simple terms, the company is more focused on increasing the number of units sold than it is on reaping lumpy profits- this is a tell-sign of a company that is geared towards attracting customers and fostering growth. In addition, the new strategy optimizes return on invested capital. This increases shareholder value and allows the management to carry on with operations without any interference from disgruntled investors.

Although the strategy was unveiled some time back, it has already started delivering material effects- as witnessed in the company's 3Q earnings report . During the quarter, the company increased inventory turns by 80 percent, signaling increased buying among its customers. Similarly, there was a 26 percent increase in first-time customers. To underscore the increased enthusiasm from first-time customers, the company also managed to record a 44 percent growth rate in orders from international markets. A crucial part of the strategy that managed to deliver increased inventory turns was the set of incentives put forward to lure new customers. First-time customers were not only given daily deal offers but they were also given promotional shipping, which essentially translates to free shipping.

As expected the increase in first-time customers came at a cost; nevertheless it was a worthy cost considering that the company is edging closer and closer to meeting its goals. Costs tied to first-time customers (daily deal offers and promotional shipping) partly contributed to the decrease in gross margins percentages which decreased from 29.1 percent to 13.6 percent. All the same, the company as of the moment has managed to not only cast its net over very many new customers but it has also maintained a leash on its current customers. This will greatly favor the company during the holiday season and thereafter. Given its strategy and positioning in the fashion industry, Bluefly is one of the emerging growth companies that it set to benefit from the increase in ecommerce spending.